JEEM worthy

From the inbox:

Excellent news about one of my 2005 JEEM papers. Does this reveal that applied economics papers are more heavily cited than theory papers (of which there are a lot in JEEM) and in turn what does this mean? Does this infer that they have a larger impact? What does impact really mean? Given the period is from 2005-2009 this must give a large advantage to 2005 papers :-)

The certificate will take pride of place on my office wall. Now I need to try to write the elusive third JEEM paper. Not an easy task.

I am delighted to inform you that one of your papers has been recognised in the "Top 20 most-cited articles" published in Journal of Environmental Economics and Management 2005 - 2009*:

Industrial characteristics, environmental regulations and air pollution: An analysis of the UK manufacturing sector
Volume 50, Issue 1, (2005), Pages 121 - 143
Cole M.A., Elliott R.J.R., Shimamoto K.

We will be sending you a certificate (with additional certificates for co-authors for onward distribution) in acknowledge of your paper's achievement.

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"Plastic Tomb"

We have previously covered the "great plastic patch" floating in an ocean near you. It has now inspired a song called "plastic tomb" - a great title. "Texas-sized vortex" is how the song's author describes the said patch - wow.

The video is worth watching - on mute if you are not a big fan of Peter Buffet's driving rock ballard.

The description provided with the video makes for interesting reading. You will have to judge for yourselves whether the beat is powerful and the harmonies chilling.

In honor of Earth Day, Peter is releasing the driving rock ballad "Plastic Tomb," whose powerful beat and chilling harmonies remind us of the relentless grip that big box stores have on today's consumer culture. The harm from such material excess is evident in the Great Pacific Garbage Patch – a Texas-sized vortex of marine litter consisting of pelagic plastics, chemical sludge, and other debris in the Northern Pacific ocean. With characteristic urgency, Peter urges us to break free from these wasteful habits, and in turn, eliminate the wake of plastic and paper across the planet.



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Trade, Biolfuels and the environment

Within the globalisation and the environment family comes the introduction of biofuels into a Hecksher-Ohlin framework.

This is a potentially useful addition to the trade literature.

The Economics of Trade, Biofuel, and the Environment

Hochman, Gal, University of California, Berkeley and Ben Gurion University, Isreal;
Sexton, Steven, University of California, Berkeley;
Zilberman, David D., University of California, Berkeley and Giannini Foundation

Abstract
The introduction of renewable biofuels was associated with global food crisis and unintended environmental consequences. This paper incorporates energy environment and agricultural sector to the classic Hecksher-Ohlin model to address these issues. A household production function model was introduced to model consumer energy choices and concern about externalities related to climate change and open space. The conceptual model links energy and food markets and derives guidelines for the development of climate change and land-use policies. The results suggest that globalization and capital flows increase demand for energy, leading to decline in food production, increase in food prices, and loss of environmental land. Globally optimal outcomes may require introducing an emission tax and a land-use tax. The introduction of these policies may undermine the factor price equalization theorem. Policies that allow enhancing either agriculture productivity (e.g., agriculture biotechnology) or biofuel productivity (e.g., second-generation biofuels), are shown to lessen the resource constraint associated with the cost of introducing renewable energy.

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Migration and climate change

One of the main "negatives" associated with climate change are the potential costs from mass migration as thousands or millions of people move to avoid the worst ravages of changes in the climate and sea level rises.

The following World Bank policy paper might be of interest to get an academic perspective. I am not sure I believe that the risk of violent conflict is minimal although the fact that the majority of forced migration will occur in developing countries is self evident.

Accommodating Migration to Promote Adaptation to Climate Change [PDF]

Jon R. Barnett

Michael Webber

World Bank Policy Research Working Paper No. 5270

Abstract:
This paper explains how climate change may increase future migration, and which risks are associated with such migration. It also examines how some of this migration may enhance the capacity of communities to adapt to climate change. Climate change is likely to result in some increase above baseline rates of migration in the next 40 years. Most of this migration will occur within developing countries. There is little reason to think that such migration will increase the risk of violent conflict. Not all movements in response to climate change will have negative outcomes for the people that move, or the places they come from and go to. Migration, a proven development strategy, can increase the capacity of communities to adapt to climate change. The fewer choices people have about moving, however, the less likely it is that the outcomes of that movement will be positive. Involuntary resettlement should be a last resort. Many of the most dire risks arising from climate-motivated migration can be avoided through careful policy. Policy responses to minimize the risks associated with migration in response to climate change, and to maximize migration's contribution to adaptive capacity include: ensuring that migrants have the same rights and opportunities as host communities; reducing the costs of moving money and people between areas of origin and destination; facilitating mutual understanding among migrants and host communities; clarifying property rights where they are contested; ensuring that efforts to assist migrants include host communities; and strengthening regional and international emergency response systems.

Keywords: Population Policies, Climate Change Mitigation and Green House Gases, Health Monitoring & Evaluation, Climate Change Economics, Voluntary and Involuntary Resettlement

Is Hydropower the future?

I have inaugurated a new "label" called hydropower. This is one of my new exciting research projects and the links between the environment and hydropower are fairly obvious. The World Bank is pushing hydropower as a solution to green energy and growth but is it all that it is cracked up to be?

Are all hydroelectric dams "environmentally hazardous money losers"?

Brazil Completes Controversial Amazon Dam Auction {planetArk]

Brazil awarded a domestic consortium on Tuesday rights to build the world's third-largest hydroelectric dam in the Amazon rain forest in a chaotic auction amid criticism the dam is an environmentally hazardous money loser.

President Luiz Inacio Lula da Silva likely faces a prolonged battle over the 11,000 megawatt Belo Monte dam that he has heavily promoted despite opposition from a range of critics including Hollywood director James Cameron.

Government leaders say the project, due to start producing electricity in 2015, will provide crucial power for Brazil's fast-growing economy, but environmentalists and activists say it will damage a sensitive ecosystem and displace around 20,000 local residents.

State power regulator Aneel said a consortium including state electric company Eletrobras and a group of Brazilian construction companies -- considered the weaker of the two consortia that participated -- won the bid.

Those results were blocked from being announced for more than two hours because a last-minute injunction trying to halt the project on environmental grounds.

The results of the auction are unlikely to affect overall electricity rates in Brazil because most of the electricity is already set aside for specific clients, with only a small remainder entering power markets.

PROTESTS

Financial analysts say the government set an artificially low price for the power to be generated by the dam, adding it faces considerable risks including cost overruns and the likelihood that protests will frequently halt construction.

Native Indians in the area are already promising just that.

Luis Xipaya, a local leader speaking to Reuters from the city of Altamira near the proposed dam site, said 150 Xikrin Kayapo Indians will move to a new village on the construction site by Wednesday.

"There will be bloodshed and the government will be responsible for that," Xipaya said.

Environmental activist group Greenpeace organized an early morning dump of several tonnes of manure at Aneel's gate to visually demonstrate "the legacy that the Lula government is leaving by insisting on this project."

The auction has for weeks been a stop-and-start process that by Tuesday had already been halted twice by court orders that the government quickly overturned.

The winning consortium, known as Norte Energia, will sell the power for 78 reais ($44.5) per megawatt hour, below the maximum price of 83 reais established by the government as the maximum.

Earlier this month two of the country's biggest construction firms walked away from Belo Monte, saying it financial returns were too low -- threatening the leave only one consortium in the running.

The Norte Energia consortium was formed at the last minute after the government added sweeteners including a 75 percent income tax write off and longer-term financing from the state development bank BNDES, which will finance 80 percent of the estimated cost of the project.

Slack investor interest also created the unusual situation of Eletrobras bidding in both consortia, though authorities said this was allowed under the bidding rules.

Official estimates put the construction costs at 19 billion reais ($11 billion) though private sector estimates go as high as 30 billion reais ($17 billion) for the project.

Originally conceived 30 years ago, progress on Belo Monte has been slowed over the years by protests, including an incident last year in which Kayapo Indians armed with clubs and machetes attacked a state electricity official.

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Litter picking in the "death zone"

Cleaning up the environment is a worthy cause and all the more so when the cleaning up has to take place above 8000 metres - also known as the "death zone".

I can not put my finger on why I think this story is bloggable but it is strangely alluring.

The fact that the rubbish can be seen at all is related to the old favourite - "climate change" - snow melts, revealing piles of rubbish from the last 50 years.

Three corpses will also be removed from the mountain saving subsequent climbers from a rather dispiriting view.

Everest "Death Zone" Set For A Spring Clean Up [PlanetArk]

Twenty Nepali climbers are setting off to Mount Everest this week to try and remove decades-old garbage from the mountain in the world's highest ever clean-up campaign, organizers said Monday.

Many foreign and Nepali climbers have cleaned Mount Everest in the past but Namgyal Sherpa, leader of the Extreme Everest Expedition 2010, said no one had dared to clean above 8,000 meters (26,246 feet), an area known as the "death zone" for the lack of oxygen and treacherous terrain.

Sherpa and his team of seasoned climbers, carrying empty rucksacks and special bags, will risk the zone's thin air and freezing temperatures to pick empty oxygen bottles, gas canisters, torn tents, ropes, and utensils lying between the South Col and the 8,850 meter (29,035 feet) summit.

"This is the first time we are cleaning at that height, the death zone. It is very difficult and dangerous," said Sherpa, who has climbed Everest, the world's tallest peak, seven times.

"The garbage was buried under snow in the past. But now it has come out on the surface because of the melting of snow due to global warming," the 30-year-old said.

"The rubbish is creating problems for climbers ... Some items of garbage are from Hillary's time."

The mountain has become known as being the world's highest garbage dump. Many climbers leave their gear and trash behind as they descend due to exhaustion and lack of oxygen.

New Zealander Sir Edmund Hillary and Nepal's Tenzing Norgay Sherpa were the first to ascend to Mount Everest's summit in 1953. That feat opened Nepal as a popular tourist destination.

More than 4,000 climbers have since scaled the mountain and tourism, including climbing, is a key source of income for Nepal, among the world's poorest countries.

Sherpa's team hopes to bring down at least 2,000 kg of garbage and the corpse of a climber killed two years ago.

"I have seen three corpses lying there for years," Sherpa said.

"We'll bring down the body of a Swiss climber who died in the mountain in 2008 and cremate it below the base camp for which we have got the family's consent."

4th World Congress of Environmental and Resource Economists - G&E are in the house

Good news from the inbox. I have not been to Canada before - I don't expect that Montreal has any good "tar sands" to look round while I am there.

Happy to meet up in Montreal with any readers/bloggers that are left given my shoddy posting frequency rate of late.

Hopefully the Icelandic volcano that has grounded planes in the UK today will have blown itself out by then (and mitigated climate change at the same time).

Dear Dr Robert Elliott:

We are happy to inform you that your paper, TRADE, ENVIRONMENTAL REGULATIONS AND INDUSTRIAL MOBILITY: AN INDUSTRY-LEVEL STUDY FOR JAPAN (Reference No: 37), has been accepted for presentation at the 4th World Congress of Environmental and Resource Economists that will be held at the Université du Québec à Montréal, June 28-July 2nd, 2010. We received more than 1700 submissions and the selection process has been highly competitive. Congratulations.

Presenters have to be registered by April 30th, 2010, in order for this decision to become effective and their paper to be included in the program. April 30th is also the deadline for early (lower fee) registration.

My current research with Toshi Okubo (Kobe) and Matt Cole (Birmingham) uses firm level data for Japan - so far, so good for the results.

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Economists going green - Krugman goes Env-econ 101

Late to the party as usual but here is a link to the Paul Krugman article on environmental economics.

Building a Green Economy [NYT]

If you listen to climate scientists — and despite the relentless campaign to discredit their work, you should — it is long past time to do something about emissions of carbon dioxide and other greenhouse gases. If we continue with business as usual, they say, we are facing a rise in global temperatures that will be little short of apocalyptic. And to avoid that apocalypse, we have to wean our economy from the use of fossil fuels, coal above all.

But is it possible to make drastic cuts in greenhouse-gas emissions without destroying our economy?

It is a good question. This article is a must read for all environmental economics students.

In what follows, I will offer a brief survey of the economics of climate change or, more precisely, the economics of lessening climate change. I’ll try to lay out the areas of broad agreement as well as those that remain in major dispute. First, though, a primer in the basic economics of environmental protection.

The conclusion of this excellent article is that the economists and ready and we are tooled up with tools to make it happen. What is missing is the political will. Not for the first time, bad political decisions could have bad economic consequences.

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Global climate deal hopes melt away

The predictable failure of Copenhagen will be compounded when the US and China agree not to have any legally binding rules on emissions. This is of no surprise although total and utter failure may lead to some benefits......

Of course a "shift to a less amitious goal might help". Why was this no pursued in the first place given the inevitable failure of the more ambitious goals?

The only real solution in my opinion is for the big six or even the big two (US and China) to sign their own bilateral deal. This is the only real way to make any progress on CO2 emissions in the short term.

The "will" has been "sapped" and will take time to recover.

Giving Up Climate Treaty May Unblock U.N. Deal [PlanetArk]

The prospect of a global climate treaty is fading as the world's top two carbon emitters, China and the United States, avoid legally binding action. Experts say a shift to a less ambitious goal might help.

Less focus on a new treaty might resolve a tangle of disputes over the legal framework and drive concrete action, for example to preserve rainforests or to help developing nations cope with droughts, heatwaves, floods or rising seas.

U.N. climate talks to try to agree a tougher, wider successor to the present Kyoto Protocol entered their third year at an April 9-11 meeting in Bonn, Germany, the first since a fractious summit in Copenhagen in December.

Copenhagen was billed as the world's best chance to agree a new treaty. Failure to achieve a treaty or the smaller goal of binding carbon cuts for rich nations has sapped momentum and is forcing a search for less ambitious solutions.

"We can't afford only to keep coming back year after year, we have to explore other options," said Annie Petsonk, international counsel at the U.S.-based Environmental Defense Fund, adding that a treaty was still possible.

Annual U.N. climate meetings have failed to achieve any major breakthrough since signing the Kyoto Protocol in 1997. The present round of that pact expires in 2012.

Experts note a less formal deal, outside a legal framework, may now emerge, building on the actions of individual nations.

More than 100 countries have backed a non-binding Copenhagen Accord to mobilize $30 billion in climate aid from 2010-2012 to help poor nations face the impacts of climate change, underscoring what could be agreed outside a legal framework.

"It used to be said that countries would only act if there was a treaty, but that's not the case," said Jake Schmidt, international climate policy director at Natural Resources Defense Council.

"A lot is happening even though we don't have an international agreement," he said, referring to the accord.

MEXICO

Mexico, which will host the next annual talks after Copenhagen in Cancun in late 2010, said that demands for a legally binding treaty should not get in the way of progress at that meeting.

"We do not want to get ensnared in the legal stuff so that we will be prevented from moving. What we want is to achieve a sensible global mobilization," Mexico's chief delegate Fernando Tudela said.

"If a legally binding treaty is possible and helps, we are all for it. But it's not a pre-condition for moving in the right direction." One senior developing country delegate accepted privately that the U.N. process may never agree a legal pact.

The difficulty of agreeing a binding treaty centers on the United States and China, who "remain in a dance about this issue," said Jennifer Morgan, from the World Resources Institute.

"There's not a legal treaty until you break this Gordian knot of the U.S. and China in particular having very different views of what it means to be legally binding," said Alden Meyer, of the Union of Concerned Scientists.

U.S. legislation to cut emissions is stalled in the U.S. Senate. And the United States will balk at binding targets unless China makes its own actions accountable in some international way.

Another roadblock to any treaty is a requirement for unanimity in U.N. talks -- absent in Copenhagen and which remained elusive in Bonn, as developing nations notably Cuba, Bolivia and Venezuela rejected any attempt to build agreement in smaller groups.

One of the reasons why a treaty has been the goal, especially of developing countries, was because it allows for sanctions on rich countries which miss their targets. Enforcing a non-binding deal is far more difficult.

Petsonk advocated an approach where rich nations tied developing countries and each other to certain minimum action before benefiting from a $125 billion carbon market.

That would draw upon a voluntary World Trade Organization model which has widened free trade by offering the benefits of WTO membership.

The biggest buyer of carbon offsets, the European Union, has already laid plans to limit its financing of carbon-cutting projects in emerging economies which do not bolster climate action. The United States, Japan and Australia plan cap and trade schemes which would scale up that carbon finance carrot.

Without such an approach the only crutch to a non-binding deal may be international criticism. "Naming and shaming may be what we end up with," Meyer said.

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Peak Oil Man discovers economics!

"Peak Oil" and the peak oilers associated with this idea are a strange bunch. It is interesting to note that the daddy of peak oil has suddenly realised that "economics" might have something to say on this matter.

Economics is sometimes a little more subtle than supply and demand. Behaviour is the key.

Peak Oil Man Shifts Focus To Peak Price, Demand [World Environment News]

The economic shock of global recession has led a prime exponent of the theory conventional oil output has peaked to shift his view of the consequences, but he still thinks the world has to go green.

Retired petroleum geologist Colin Campbell, who worked for major oil companies as well as smaller firms, has long been associated with the belief the world's oil supplies are dwindling.

He does not waver from that and dismisses the argument of the so-called optimists that technology will manage to keep eking out more and more oil to keep pace with rising demand.

What has changed is his opinion of the price impact and implications for fuel consumption after the spike of July 2008 to nearly $150 a barrel was followed by world economic recession, a deep drop in fuel use and a crash in oil futures to just above $30 in December 2008.

"I have changed my point of view about future prices," said Campbell, who used to think the peak in conventional oil production, which he believes happened in 2005, would lead to a relentless price surge.

Instead, the record rally led to a peak in demand in the developed world.

"Peak oil drives prices up in the first place. It has its own mechanism. We're sort of at peak demand right now," Campbell told Reuters from his home in the village of Ballydehob, West Cork. "I think presently the price limit is about $100."

For those who have painted alarming pictures of civil unrest as the world economy is forced to move away from conventional fuel and pay high prices for it in the interim, an inbuilt price mechanism to limit demand and move the world to other forms of energy should be a good thing.

"We have no alternative but to go green," Campbell said.

But he does not think reduced demand is enough to offset the gravity of peaking supply. He still sees a possibility of social anger as millions are forced to change their lifestyles in a too-sudden structural shift from economic growth driven by cheap conventional fuel.

CONVENTIONAL VERSUS UNCONVENTIONAL

Campbell's theory, which he developed from studying first Colombia's oil reserves and then analyzing global data on the world's oilfields, applies to conventional oil.

The peak for difficult-to-extract, non-conventional sources, including oil sands and polar oil -- for instance, in Arctic regions of Russia -- is three years later, in 2008. The problem is non-conventional oil only "ameliorates the decline" and relies on high oil prices to be viable.

"They are no substitutes for what we have built the economy on so far," said Campbell, whose oil depletion theory has been published in books and through the Association for the Study of Peak Oil, which gave its first workshop in 2002.

Since then, the peak oil theory has nudged its way further into the mainstream and was widely publicized around the 2008 price spike, but it is hotly contested by many in the oil industry, including OPEC, which argues the world will rely on fossil fuels for decades to come.

Campbell's analysis of data questioned reporting of reserves by the Organization of the Petroleum Exporting Countries, whose members' upward revisions, he said, were not credible.

"It's absolutely implausible new discoveries would absolutely match that produced," he said.

He takes the view the reporting of higher reserves was designed to ensure higher output targets for individual OPEC members -- targets, he said, were increasingly irrelevant.

As OPEC heads toward its 50th anniversary in September this year, for Campbell the producer club has lost its "raison d'etre."

Prices, he argued, were likely to stay sufficiently high as supplies dwindled naturally and the danger for OPEC was the market would embark on another rally that could further focus attention on the pursuit of alternatives to oil.

"OPEC's purpose is to limit production to hold prices up. It no longer has any need to do so," he said.

Now try the Peak Oil survivors guide "Life after Gridcrash" great title. This new Amazon blogger widgit is great.



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The Green Paradox II - too much oil?

Today is "Green Paradox" day.

Following on from Rick Van der Ploeg comes a new paper from Reyer Gerlagh (Tilborg). Incidently, both presented papers at the University of Birmingham last year (although not these papers).

Both papers suggest the green paradox could be an illusion or more accurately not a paradox at all. As I rule I am a fan of paradoxes so it is a shame to see another one bite the dust.

Too Much Oil

Reyer Gerlagh
Tilburg University - Center and Faculty of Economics and Business Administration


February 25, 2010

FEEM Working Paper No. 14.2009

Abstract:
Fear for oil exhaustion and its consequences on economic growth has been a driver of a rich literature on exhaustible resources from the 1970s onwards. But our view on oil has remarkably changed and we now worry how we should constrain climate change damages associated with oil and other fossil fuel use. In this climate change debate, economists have pointed to a green paradox: when policy makers stimulate the development of non-carbon energy sources to (partly) replace fossil fuels in the future, oil markets may anticipate a future reduction in demand and increase current supply. The availability of ‘green’ technologies may increase damages. The insight comes from the basic exhaustible resource model. We reproduce the green paradox and to facilitate discussion differentiate between a weak and a strong version, related to short-term and long-term effects, respectively. Then we analyze the green paradox in 2 standard modifications of the exhaustible resource model. We find that increasing fossil fuel extraction costs counteracts the strong green paradox, while with imperfect energy substitutes both the weak and strong green paradox may vanish.

Keywords: Green Paradox, Climate Change, Exhaustible Resources, Fossil Fuels

JEL Classifications: Q31, Q54
Working Paper Series


I am experimenting with the all new Amazon links which are now worth doing (as the hassle factor has been reduced considerably).

You have to love Peak Oil and it's partner in crime "Hubbert's Peak".



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Is There Really a Green Paradox?

Rick Van der Ploeg (Oxford) is working on a number of interesting areas.

The green paradox is important and often over looked.

"The Green Paradox states that, in the absence of a tax on CO2 emissions, subsidizing a renewable backstop such as solar or wind energy brings forward the date at which fossil fuels become exhausted and consequently global warming is aggravated."

Seems obvious - is there a solution?

Is There Really a Green Paradox?

Rick Van der Ploeg
University of Oxford; European University Institute - Economics Department (ECO); CESifo (Center for Economic Studies and Ifo Institute for Economic Research); Centre for Economic Policy Research (CEPR)

Cees Withagen
Free University of Amsterdam; Tilburg University

February 2010

CESifo Working Paper Series No. 2963

Abstract:
The Green Paradox states that, in the absence of a tax on CO2 emissions, subsidizing a renewable backstop such as solar or wind energy brings forward the date at which fossil fuels become exhausted and consequently global warming is aggravated. We shed light on this issue by solving a model of depletion of non-renewable fossil fuels followed by a switch to a renewable backstop, paying attention to timing of the switch and the amount of fossil fuels remaining unexploited. We show that the Green Paradox occurs for relatively expensive but clean backstops (such as solar or wind), but does not occur if the backstop is sufficiently cheap relative to marginal global warming damages (e.g., nuclear energy) as then it is attractive to leave fossil fuels unexploited and thus limit CO2 emissions. We show that, without a CO2 tax, subsidizing the backstop might enhance welfare. If the backstop is relatively dirty and cheap (e.g., coal), there might be a period with simultaneous use of the non-renewable and renewable fuels. If the backstop is very dirty compared to oil or gas (e.g., tar sands), there is no simultaneous use. The optimum policy requires an initially rising CO2 tax followed by a gradually declining CO2 tax once the dirty backstop has been introduced. We also discuss the potential for limit pricing when the non-renewable resource is owned by a monopolist.

Keywords: Green Paradox, Hotelling rule, non-renewable resource, renewable backstop, global warming, carbon tax, limit pricing

JEL Classifications: Q30, Q42, Q54
Working Paper Series

CO2 and its local impact

One of the difficulties with looking at CO2 emissions is the lack of a "local impact" of CO2. This causes problems both theoretically and empirically.

My recent paper "Stochastic Divergence or Convergence of Per Capita Carbon Dioxide Emissions: Re-examining the Evidence" potentially suffers from this problem.

Perhaps now "motivating" such a piece of work will be a little easier.

Cities hit more by CO2 emissions

Carbon dioxide, the main greenhouse gas driving climate change, is a global problem – but a study at Stanford University in California shows it is also harmful locally, affecting city dwellers much more than their rural cousins, as a result of CO2 “domes” that develop over urban areas.

Mark Jacobson, director of Stanford’s Atmosphere/Energy Programme, found that domes of higher CO2 concentrations cause local temperature increases, which in turn increase the amount of local air pollutants such as low-level ozone and soot particles in urban air. He estimated that urban CO2 caused 50-100 excess deaths a year in California and 300-1,000 for the US, on top of the health effects of other pollutants.

The study, published in the journal Environmental Science and Technology, provides the first scientific basis for controlling local CO2 emissions based on their damage to health, according to Prof Jacobson. It also exposes an oversight in current cap-and-trade proposals for reducing CO2 emissions.

“The cap-and-trade proposal assumes there is no difference in the impact of CO2, regardless of where it originates,” Prof Jacobson said. “This study contradicts that assumption. It doesn’t mean you can never do something like cap and trade – it just means that you need to consider where the CO2 emissions are occurring.”

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Emissions FAIL

It is Friday after all.


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Tragedy of the Zimbabwe commons

From Marginal revolution.

A must read for Environmental Economics students.

See the Tragedy of the Commons [Marginal revolution]

In 2000 Zimbabwe began to forcibly redistribute land from private but predominantly white-owned commercial farms to much poorer black farmers who toiled on communal lands. Stunning pictures from Google Earth collected by Craig Richardson show the result.

Take a look at the Before picture. The communal land on the left is dry, dusty and unproductive compared to the private farmland on the right which is green and dotted with blue ponds and lakes. Why? There were two theories to explain this difference.

* The Tragedy of the Commons – the farmers on the communal lands did not have the incentives to invest in the land and thus the land eroded and turned to desert.

* The land on the right (which was owned mostly by whites) was better quality land.

Both theories could be true. Regarding the latter explanation, however, notice that the dry communal lands on the left are sharply delineated from the green private farms on the right--so sharply that soil quality and rainfall alone are unlikely to explain the difference.

So what happened after the land was redistributed beginning in 2000 and all of it made communal?

After reform the land quality worsened everywhere. In particular, note that the blue lakes and ponds on the right became dry and empty as farmers no longer had an incentive to invest in maintaining these resources. The tragedy of the commons.

This excellent visual look at the tragedy of the commons was produced by Todd Moss at The Center for Global Development based on pictures and ideas from Craig Richardson. Of course Zimbabwe had many problems before and after this forcible land redistribution. You can find more pictures, background information and a lengthier discussion of this episode here.

In addition, I have included the shifting graphic in a set of PowerPoint slides which could be incorporated in a classroom discussion of the tragedy of the commons. Feel free to modify these slides as you wish and thanks to the Center for Global Development for helping me to create the slides.

This post is an example of the material available at a new website designed for anyone teaching principles of economics and called, SeetheInvisibleHandBlog. At the new website you can can find videos, powerpoints, ideas, blog posts and much more. The material is nicely linked up with our textbook, Modern Principles, but we think that this website will be useful to anyone who teaches principles of economics.

Climate engineering and "greenfinger" - can it save the planet or end it

The idea that climate engineering - the ability for countries to make it rain or snow on demand - could solve problems raised by climate change raising some worrying possibilities.

The infamous Superfreakanomics chapter touches on a number of these issues.

So just how does it work? Personally it is hard to believe that there are not serious side affects from the rain on demand idea. Surely this means someone, somewhere is going to get less rain.

I like the idea of the lone "greenfinger".

Quick Study: Climate Engineering [Readers Digest]

Chinese and Russian scientists claim to make it rain or snow on command. But can we slow global warming with massive operations called geoengineering? A growing number of experts say yes—and that radically altering our environment may be our last, best hope of avoiding disaster. From orbiting space mirrors to artificial trees to brighter clouds, here's what's under discussion.

Flash Points
Risks vs. rewards. Like any untested tech-nology, geoengineering harbors unknown risks. An artificial cooling of the earth could disrupt global weather patterns, bringing drought and famine to parts of North Africa, India, and China.

What it would cost. Hoisting mirrors or sun shields into space could cost trillions, according to a September 2009 report by the United Kingdom's Royal Society. Stratospheric aerosols, which could block solar radiation and cool the earth, could cost tens of billions of dollars a year; cloud brightening, which reflects sunlight away from the earth, $2 billion a year. Expensive, yes, but to some economists, geo-engineering is worth pursuing. One well-regarded but controversial report projects that stratospheric aerosols could carry a benefit 27 times higher than their cost; it also suggests that marine cloud brightening could save $7.5 trillion by reducing the damage caused by global warming.

The "Greenfinger" scenario. David Victor, a climate policy expert at the University of California, San Diego, worries about the prospect of a single nation taking matters into its own hands. "It could be a Hail Mary pass by a country getting hammered by global warming," he says. A wealthy individual—Victor calls him a "lone Greenfinger"—could also choose to go it alone. To prevent unilateral action, experts need a framework for researching geoengineering and deciding, as Victor says, "who gets to put their hand on the thermostat." One such meeting, organized by the nonprofit Climate Institute in Washington, D.C., will take place this month.

Forward Thinking
Contain the carbon. Removing carbon from the air and storing it underground, or reusing it for fuel, would help slow and possibly reverse global warming. This solution, says David Keith, a physicist at the University of Calgary, would cost considerably less than what we might spend converting carbon-fed electrical to rooftop solar power. England's Institution of Mechanical Engineers has even come up with a proposal to line highways with "artificial trees" that would collect carbon dioxide at rates far exceeding those of lazy natural trees and convert it into a form that's easily collected and stored.

Deflect, deflect, deflect. National Center for Atmospheric Research climatologist John Latham, along with University of Edinburgh engineer Stephen Salter, has designed a novel way of "brightening" clouds: a fleet of remote-controlled, wind-powered ships that would spray a fine seawater mist into marine clouds. "It's established that if you have a lot of little drops instead of a few big ones, then the clouds are more reflective," says Latham. They hope to increase that reflectivity by 10 percent, which, they say, would hold the earth's temperature steady until at least 2050. Keith is devising a reflective metal particle that could levitate itself above the ozone layer to reflect heat from the sun back into space, although his main focus remains on reflective aerosols. Washington-based Intellectual Ventures Lab, owned by former Microsoft guru Nathan Myhrvold, has proposed an 18-mile-long hose suspended from balloons that would pump liquefied sulfur dioxide (a gas emitted when volcanoes erupt) into the stratosphere.

Show them the money. Last year, a House of Representatives committee held its first hearing on climate engineering but shied away from funding any proposals. "We need a balanced, open, publicly funded research program," says Keith.

The Back-and-Forth …
"A tiny investment in climate engineering might be able to reduce as much of global warming's effects as trillions of dollars spent on emissions reductions."
—Bjorn Lomborg, the Copenhagen Consensus Center

"Geoengineering is a far-fetched, pie-in-the-sky dream to avoid having to make the emissions cuts we have to make now."
—Michael Crocker, spokesman for Greenpeace

The Time Line
874–853 bc: The prophet Elijah scales Mount Carmel in Israel and prays for rain. It pours.

400–200 bc: Bronze Age cultures in China and Southeast Asia bang the kettle gong in rainmaking ceremonies.

1824: Thomas Jefferson calls for an index of the American climate to monitor the effects of massive forest clearing and marsh draining.

1830s: James Espy, the first national meteorologist, proposes lighting huge fires along the Appalachian Mountains to control and enhance the nation's rainfall.

1901: Swedish meteorologist Nils Ekholm publishes a research paper on the possibility of climate modification.

1932: The U.S.S.R.'s Leningrad Institute of Rainmaking is founded.

1946: Researchers at General Electric spread the word about cloud seeding, leading to a commercial boom in weather-modification technology.

1960–1961: The U.S.S.R. reports clearing clouds over 12,000 square miles.

1965: President Lyndon Johnson's Science Advisory Committee issues the first high-level government report to include a discussion of ways to manipulate climate.

1966: The U.S. tests cloud seeding in Vietnam.

1977: Russian physicist Mikhail Budyko proposes using planes to release sulfur dioxide into the stratosphere, creating, in effect, a fake volcanic eruption.

1992: The National Academy of Sciences report "Policy Implications of Greenhouse Warming" advocates climate control.

2006: Nobel-winning chemist Paul Crutzen suggests launching sulfur dioxide into the stratosphere with weather balloons instead of planes.

June 2007: A Carnegie Institution report suggests using sulfate particles to roll back rising global temperatures, returning the planet to the average temperatures of 1900.

February 2009: Desperate to end a drought, Chinese meteorologists fire explosive rockets loaded with chemicals into the sky. A snowfall blankets Beijing.

October 2009: China claims to have prevented rain during its 60th-anniversary parade by sprinkling liquid nitrogen into clouds.

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As the sea rises which cities go under first - or where not to buy a house

Good visualisation of the threat of rising sea levels. Click the link for city names and sea level rise information.

Information is Beautiful: When Sea Levels Attack [Guardian]



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ØDEGÅRD - sustainable business strategy

Now the Department of Economics in the University of Birmingham is now part of the Birmingham Business School following a recent strategic merger I need to start thinking "sustainable business strategy".

This new blog will form part of my research.

The blog has a lot of pictures. I guess this is what I would have expected from a more business orientated blog.

This is something that this and the daddy of environmental economics blogs "Env-econ" are still sadly short of and I suspect this has something to do with them being written by economists although I note that each Env-Econ post now has a picture of the actual economist in colour after each post. This is a little scary.

I fear I cannot subject globalisation and environment readers to such an assault on their senses.

ØDEGÅRD

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World Development Report 2010: Development and Climate Change

It was great to have Kirk Hamilton come to the University of Birmingham last week to present the results of the World Bank 2010 World Development Report on Climate Change.

The presentation was accessible but also included some good economics for us to get our teeth into.

World Bank Report



Here is the press release:

WASHINGTON, September 15, 2009 – Developing countries can shift to lower-carbon paths while promoting development and reducing poverty, but this depends on financial and technical assistance from high-income countries, says a new World Bank report released today. High-income countries also need to act quickly to reduce their carbon footprints and boost development of alternative energy sources to help tackle the problem of climate change.

World Development Report 2010: Development and Climate Change, released in advance of the December meetings on climate change in Copenhagen, says that advanced countries, which produced most of the greenhouse gas emissions of the past, must act to shape our climate future. If developed countries act now, a ‘climate-smart’ world is feasible, and the costs for getting there will be high but still manageable. A key way to do this is by ramping up funding for mitigation in developing countries, where most future growth in emissions will occur.

“The countries of the world must act now, act together and act differently on climate change,” said World Bank President Robert B. Zoellick. "Developing countries are disproportionately affected by climate change – a crisis that is not of their making and for which they are the least prepared. For that reason, an equitable deal in Copenhagen is vitally important.”



Countries need to act now because today’s decisions determine both the climate of tomorrow and the choices that shape the future. Countries need to act together because no one nation can take on the interconnected challenges posed by climate change, and global cooperation is needed to improve energy efficiencies and develop new technologies. Countries need to act differently, because we cannot plan for the future based on the climate of the past.

Developing countries will bear most of the costs of the damage from climate change. Many people in developing countries live in physically exposed locations and economically precarious conditions, and their financial and institutional capacity to adapt is limited, says the report. Already, policymakers in some developing countries note that an increasing amount of their development budget is being diverted to cope with weather-related emergencies.

At the same time, 1.6 billion people in the developing world lack access to electricity, the report notes. These developing countries—whose average per capita emissions are a fraction of those of high-income countries—need massive expansions in energy, transport, urban systems, and agricultural production. Increasing access to energy and other services using high-carbon technologies will produce more greenhouse gases, hence more climate change.



The report finds, however, that existing low-carbon technologies and best practices could reduce energy consumption significantly, saving money. For example, the report notes that it is possible to cut energy consumption in industry and the power sector by 20–30 percent, helping reduce carbon footprints without sacrificing growth. In addition, many changes to reduce emissions of greenhouse gases also deliver significant benefits in environmental sustainability, public health, energy security, and financial savings. Avoided deforestation, for instance, preserves watersheds and protects biodiversity, while forests can effectively serve as a carbon sink.

Solving the climate problem requires a transformation of the world’s energy systems in the coming decades. Research and Development investments on the order of US$100 - $700 billion annually will be needed—a major increase from the modest $13 billion a year of public funds and $40 billion to $60 billion a year of private funds currently invested.

Developing countries, particularly the poorest and most exposed, will need assistance in adapting to the changing climate. Climate finance must be greatly expanded, since current funding levels fall far short of foreseeable needs. Climate Investment Funds (CIFs), managed by the World Bank and implemented jointly with regional developing banks, offer one opportunity for leveraging support from advanced countries, since these funds can buy-down the costs of low-carbon technologies in developing countries.

“Developing countries face 75-80 percent of the potential damage from climate change. They urgently need help to prepare for drought, floods, and rising sea levels. They also need to intensify agricultural productivity, contain malnutrition and disease, and build climate-resilient infrastructure,” said Justin Lin, World Bank Chief Economist and Senior Vice-President, Development Economics.

The current financial crisis cannot be an excuse to put climate on the back burner, the report warns. While financial crises may cause serious hardship and reduce growth over the short- to medium-term, they rarely last more than a few years. The threat of a warming climate is far more severe and long-lasting.

The earth’s warming climate is making the challenge of development more complicated, even as one in four people still live on less than $1.25 a day, and over a billion people do not have sufficient food to meet their daily basic nutritional needs.

“Grappling with climate shocks that are already hampering development will not be easy. But promising new energy technologies can vastly reduce future greenhouse gas emissions and prevent catastrophic climate change. We also need to manage our farms, forests, and water resources to ensure a sustainable future,” said Rosina Bierbaum, WDR co-director and Dean of the University of Michigan’s School of Natural Resources and Environment.

“The good news is that a climate-smart world is within reach if we work together now to overcome inertia, keep costs down, and modify our energy, food, and risk management systems to ensure a safer future for everybody,” said Marianne Fay, WDR co-director and Chief Economist for Sustainable Development at the World Bank.

“There are real opportunities to shape our climate future for an inclusive and sustainable globalization, but we need a new momentum for concerted action on climate issues before it is too late,” said Robert B. Zoellick, World Bank Group President.

The World Bank Group’s "Strategic Framework for Development and Climate Change" puts emphasis on including mitigation and adaptation initiatives in its lending, while recognizing that developing countries need to encourage economic growth and reduce poverty.

The number of World Bank-financed studies that help client countries plan and implement low-carbon growth strategies are also growing, and the Bank Group’s energy financing is increasingly turning towards renewable energies and energy efficiency. Over the past three years, approximately two-thirds of the Bank Group’s total energy financing was in the area of non-fossil fuels whereas around one-third was for fossil fuels, of which half was for natural gas.

The report is well worth a read. The economic logic is fine but getting this logic translated into policy will be a lot harder (see previous post).

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The "Deep Divide" stays deep

Ever the pessimist this blog has long expounded the fact that the developed and developing countries are so far apart on climate change that there is no chance of a meaningful deal. The Copenhagen failure was the result and was expected.

China's Special Representative for Climate Change Negotiations, Yu Qingtai, makes the point very clearly.

I am afraid I can do nothing but agree with the opening statement "there is little hope in overcoming the disagreements on how to fight climate change".

The bottom line is that the world needs a G-2 or G-3 agreement and that is what I believe to be most likely . China and the US will strike their own deal that in the end might just save the planet. The EU could be included.

The Chinese national interest is what matters. All we can hope for is that pollution grows more slowly that GDP. This should happen with technological change and the composition of production.

The joker is the pack is that emissions also harm China's national interest. This is ultimately the only thing that will bring them to the negotiating table. Remember that US emissions will also harm China more than the US.

I will post up the excellent world bank climate review later.

China Envoy Says Deep Divides Threaten Climate Talks [PlanetArk]

BEIJING - Rich and developing countries have little hope of overcoming key disagreements over how to fight global warming, China's climate change ambassador said on Wednesday, warning of a year of troubled negotiations.

China's Special Representative for Climate Change Negotiations, Yu Qingtai, said as nations seek a new global treaty on climate change by the end of 2010, major players are unlikely to budge on the issues that stymied stronger agreement at the contentious Copenhagen climate summit in late 2009.

"There may be some adjustments and shifts in the positions and tactics of the various sides, but I personally believe that on some core issues, the positions of the major parties will not undergo any substantive changes," Yu said at a meeting in Beijing on China's climate change policies.

After they failed to agree on a comprehensive pact at Copenhagen, negotiators now hope to put together a binding treaty through meetings culminating in Mexico late this year.

Yu was not hopeful.

"We can expect that in the coming year, there'll still be a mix of consensus and conflict, of cooperation and struggle, on the stage of climate diplomacy," he said. "The progress of the international negotiations faces very many difficulties."

Yu's comments added to recent gloomy forecasts for the climate negotiations, an issue that could add to tensions with the United States.

Agreeing a U.N. climate treaty in 2010 will be "very difficult," the head of the U.N. Climate Change Secretariat, Yvo de Boer, said on Tuesday.

DISPUTES

China has passed the United States to become the biggest producer of greenhouse gas emissions from human activity. Yet China is a developing country with average greenhouse gas output per person far lower than in wealthy countries.

That dual status has put Beijing at the heart of disputes with the United States, European Union and other rich economies about how developed and big developing countries should share out burdens for controlling greenhouse gas emissions.

Also crucial is how much international scrutiny should apply to the emissions actions of big developing nations.

In Copenhagen, China and other poorer countries accused the West of offering too little in the way of emissions cuts and climate funds and technology to the Third World.

Britain, Sweden and other countries accused China of obstructing stronger agreement at the Copenhagen summit, which ended with a non-binding accord.

China should not expect wealthy countries to change their tune this year, said Yu.

"I believe that there won't be any substantive change in the developed countries' settled policy of shifting blame to the developing countries," he said.

"They will continue pressuring the developing countries to shoulder unreasonable responsibilities."

The speeches by Yu and other Chinese climate policy officials were published online by an official news website (www.china.com.cn).

Yu said China and other developing countries would defend their right to grow their economies without taking on internationally binding emissions targets.

Chinese President Hu Jintao said on Tuesday he was committed to fighting climate change and pressing forward with a domestic goal to cut carbon intensity.

China has vowed to reduce the amount of carbon dioxide -- the main greenhouse gas from human activity -- emitted to create each unit of economic worth by 40-45 percent by 2020, compared with 2005 levels.

This goal would let China's greenhouse gas emissions keep rising, but more slowly than economic growth.

But Hu also said Beijing was committed to the "common but differentiated" principle: that developing countries should take action to fight climate change, but not assume the internationally binding emissions targets that developed countries must shoulder under U.N.-backed climate treaties.

Yu said negotiators should not expect China to budge.

"When it comes to responsibilities that we should not assume, that harm our national interests, we will resolutely hold out, no matter how much pressure there is in the negotiations," said Yu.

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